OFPS Entrepreneurship 3e: © Oxford Fajar Sdn. Bhd. (008974-T), 2013 1 - 1

OFPS Entrepreneurship 3e All Rights Reserved
© Oxford Fajar Sdn. Bhd. (008974-T), 2013 1– 1

7
Chapter
BUSINESS PLAN

BUSINESS PLAN
 AT THE END OF THIS CHAPTER, YOU WILL BE

ABLE TO:
– Deﬁne what is a business plan.
– List the individuals who need a business plan.
– Explain the importance of a business plan to an entrepreneur.
– List the main sections of a business plan.
– Describe the format of a business plan.
– Discuss the guidelines in preparing a business plan.
– Explain the reasons for failure in a business plan.

INTRODUCTION
 Business planning is one of the

management tools used to achieve
business objectives.
 The accuracy of a business plan will reflect
management's ability, experience and
history in running the business.

BUSINESS PLAN
 The business plan is also known as venture

plan, entrepreneur plan, working paper, project
paper or prospectus.
 The plan serves as a guide and blueprint for a
proposed business project that one intends to
undertake.

VARIOUS PARTIES WHO NEED A
BUSINESS PLAN
 A business plan is very important to various

parties for many reasons.
 Among those who need a Business Plan are...

INDIVIDUALS WHO NEED A
BUSINESS PLAN

THE IMPORTANCE OF A BUSINESS PLAN

THE CHARACTERISTICS OF A
GOOD BUSINESS PLAN
The business concept Finally, the financial section
The marketplace section

THE BUSINESS CONCEPT
 Where you discuss the industry, your business

structure, your particular product or service, and how
you plan to make your business a success.
BACK

THE MARKETPLACE SECTION
 In which you describe and analyze potential customers:

who and where they are, what makes them buy and so on.
 Here, you also describe the competition and how you’ll
position yourself to beat it.
BACK

THE FINANCIAL SECTION
 Contains your income and cash flow statement,

balance sheet and other financial ratios, such as
break-even analyses. This part may require help
from your accountant and a good spreadsheet
software program.

EXPLAINING THE BUSINESS PLAN
FORMAT
A) COVER LETTER
 The cover letter is often enclosed with the
completed Business Plan as an introduction to the
purpose and contents of the attached plan.
 This letter needs to specify what the entrepreneur
hopes to obtain from the Business Plan being
submitted and subsequently evaluated by the
relevant recipient.

B) COVER PAGE
 The cover page presents certain basic introductory

information as follows:
– Title of the business plan
– Logo, name and address of the business
– Name of the writer/s
– Date of submission
– Company's mission

C) EXECUTIVE SUMMARY / ABSTRACT
 The executive summary is the most important section
of a business plan. This is the first section that needs
to be looked at and it tells readers where the company
is and where the company wants to go.
– Objective
– Products or services being offered
– Market potential
– Project management
– Project cost
– Expected returns

D) TABLE OF CONTENTS
 This page will list the main headings, tables,
schedules and appendices according to page
numbers.
 This list will facilitate the reader in identifying the
appropriate pages for easy reference.

E) MAIN BODY OF THE BUSINESS PLAN
 This section is central and vital in making up the
complete business plan.
 It contains information related to the various aspects
of the proposed venture particularly the
administrative, marketing, operation and the
financial plans.

MAIN BODY OF A BUSINESS PLAN

THE PURPOSE OF PREPARING A
BUSINESS PLAN
THE PURPOSE OF PREPARING A
BUSINESS PLAN
To allow the entrepreneur to view To allocate business resources

and evaluate the proposed business effectively
venture in an objective, critical and
practical manner
To analyse and evaluate the As a guideline for managing the

viability of a proposed venture business.
• To convince relevant parties of the

investment potential of the project

SWOT Analysis
 The entrepreneur can view and evaluate the

proposed business venture in an objective,
critical and practical manner by SWOT analysis,
which highlights:
– Strengths
– Weaknesses
– Threats
– Opportunities

Analysis and Evaluation
 An entrepreneur must analyze and evaluate the

viability of a proposed venture.
 This is necessary to assist potential investors in
analyzing and evaluating the viability of a project.

Allocation of Business Resources
 The effective allocation of business resources is

used to attract investment capital, secure loans,
convince workers to join, and assist in attracting
strategic business partners.
 The development of a comprehensive business
plan shows whether or not a business has the
potential to make a profit.

As a guideline
 As a guideline for the managing the business, the business

plan helps entrepreneurs to track, monitor and evaluate
their progress.
 The business plan is a living document that they will modify
as they gain knowledge and experience.

To convince relevant parties
 A business plan is used to convince relevant parties of

the investment potential of the business project.
– To apply for loans or financing facilities from relevant
institutions.
– State clearly the amount required and the purpose of the loan.
– Helps the financial institutions evaluate the viability of the
proposed project and decide on financing.

Location of the Business
 Physical location of project

– Distance from the source of raw materials
– Availability of manpower
– Transportation facilities
– Distance from customers

Organization / Administration Plan
Organization/ Management/ Administration Plan
Introduction to Schedule of tasks and

the organization Administration
responsibilities
budget
Organization chart/ Schedule of
Structure remuneration
List of administration List of office equipment

personnel and supplies

MARKETING PLAN / ANALYSIS
Marketing Plan /Market Analysis
Target market Product or services description/

product innovation/Introduction
Competitors (strength and weaknesses)
Market size
Sales forecast
Marketing strategy
List of marketing personnel
Market share
List the main tasks and
responsibilities Marketing budget

Operations Plan
Operations process / Process

innovation
Process flow chart

Schedule of tasks and
responsibilities
List of personnel Schedule of

remuneration
Operation Plan/
Production Strategy
Machinery and equipment
Material
requirement
Operations layout plan

Operations
Location of operations
budget
Operations overhead
Production schedule/Capacity planning –
Output in units/ Operations time

FINANCIAL PLAN
Prepare the project

Prepare the sources of financial
implementation cost schedule
schedule
Financial Plan/Strategy/Analysis/Statement
Prepare the pro forma balance

sheet
Prepare the pro forma cash flow
statements
Prepare the proforma profit and loss
account/ proforma income statement

Guidelines in Preparing Business Plan

Information should be based on study
 Do not estimate the sales on the basis of plant

capacity.
 The planner must estimate the potential sales
carefully on the basis of the marketing study and
form these estimations to determine the
production facilities required.

Reasons for Failure in Business Plan

Pitfalls to Avoid When Preparing a
Business Plan
NO REALISTIC
GOALS FAILURE TO
ANTICIPATE
OBSTACLES
NO COMMITMENT
LACK OF BUSINESS
OR DEDICATION
OR TECHNICAL
EXPERIENCE
NO MARKET
NICHE


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OFPS Entrepreneurship 3e All Rights Reserved

© Oxford Fajar Sdn. Bhd. (008974-T), 2013 1– 1

OFPS Entrepreneurship 3e All Rights Reserved

 AT THE END OF THIS CHAPTER, YOU WILL BE

OFPS Entrepreneurship 3e All Rights Reserved

 Business planning is one of the

OFPS Entrepreneurship 3e All Rights Reserved

 The business plan is also known as venture

OFPS Entrepreneurship 3e All Rights Reserved

 A business plan is very important to various

OFPS Entrepreneurship 3e All Rights Reserved

OFPS Entrepreneurship 3e All Rights Reserved

OFPS Entrepreneurship 3e All Rights Reserved

The business concept Finally, the financial section

The marketplace section

OFPS Entrepreneurship 3e All Rights Reserved

 Where you discuss the industry, your business

OFPS Entrepreneurship 3e All Rights Reserved

 In which you describe and analyze potential customers:

OFPS Entrepreneurship 3e All Rights Reserved

 Contains your income and cash flow statement,

OFPS Entrepreneurship 3e All Rights Reserved

OFPS Entrepreneurship 3e All Rights Reserved

 The cover page presents certain basic introductory

OFPS Entrepreneurship 3e All Rights Reserved

OFPS Entrepreneurship 3e All Rights Reserved

OFPS Entrepreneurship 3e All Rights Reserved

OFPS Entrepreneurship 3e All Rights Reserved

OFPS Entrepreneurship 3e All Rights Reserved

To allow the entrepreneur to view To allocate business resources

To analyse and evaluate the As a guideline for managing the

• To convince relevant parties of the

OFPS Entrepreneurship 3e All Rights Reserved

 The entrepreneur can view and evaluate the

OFPS Entrepreneurship 3e All Rights Reserved

 An entrepreneur must analyze and evaluate the

OFPS Entrepreneurship 3e All Rights Reserved

 The effective allocation of business resources is

OFPS Entrepreneurship 3e All Rights Reserved

 As a guideline for the managing the business, the business

OFPS Entrepreneurship 3e All Rights Reserved

 A business plan is used to convince relevant parties of

OFPS Entrepreneurship 3e All Rights Reserved

 Physical location of project

OFPS Entrepreneurship 3e All Rights Reserved

Organization/ Management/ Administration Plan

Introduction to Schedule of tasks and

List of administration List of office equipment

OFPS Entrepreneurship 3e All Rights Reserved

Marketing Plan /Market Analysis

Target market Product or services description/

OFPS Entrepreneurship 3e All Rights Reserved

Operations process / Process

Process flow chart

List of personnel Schedule of

Operations layout plan

OFPS Entrepreneurship 3e All Rights Reserved

Prepare the project

Prepare the pro forma balance

OFPS Entrepreneurship 3e All Rights Reserved

OFPS Entrepreneurship 3e All Rights Reserved

 Do not estimate the sales on the basis of plant

OFPS Entrepreneurship 3e All Rights Reserved